Caribbean Basin holds promise/challenge for Southern growers

Paul L. Hollis Farm Press Editorial Staff | Feb 12, 2004

Arecent University of Georgia study reveals that the Caribbean Basin is a potential export market for the state's fruits and vegetables. The study found that these countries rely heavily on U.S. products - including fruits and vegetables - but that Georgia farmers haven't taken advantage of the opportunity to penetrate these growing markets.

On the other side of the coin, Caribbean fruits and vegetables could have a negative effect on Texas producers.

The study, conducted by University of Georgia Extension economist Greg Fonsah, states that the recent increase in U.S. agricultural trade was triggered by several factors, including population growth, changes in macroeconomic performance, the depreciation of the U.S. dollar against the Euro and other developed economy currencies, and unfavorable weather conditions affecting some competitors.

Conversely, the strong U.S. dollar against the yen and other foreign currencies has an adverse effect on the overall U.S. agricultural trade balances.

“For instance, China recently has become the export leader of fresh an frozen fruits and vegetables to Japan, a position maintained by the United States for more than a decade. In 2000, China already had captured 35 percent of the Japanese market for fruits and vegetables, up from 6 percent in 1990. Furthermore, the implementation of NAFTA was instrumental in boosting trade ties between Canada, Mexico and the United States,” says Fonsah.

Consequently, he continues, Canada has outpaced Japan to become the United States' No. 1 trading partner and a principal importer of U.S. fruits, vegetables, grains, oilseed and meat in 2000. “Even thought Georgia, California and Florida are the principal squash-producing states, Mexico still remains the main competitor, with 98 percent of total U.S. squash imports in 2000 originating from Mexico.

Presently, Georgia's supply of onions, watermelons, cabbages, cucumbers, bell peppers, peaches, snap beans, eggplants, pecans and lima beans surpasses local/domestic demand,” states the economist. The problem at hand, says Fonsah, is how to develop new markets for Georgia fruits and vegetables that should absorb the excess production. The primary objective of the study, he adds, was to seek and/or develop alternative export market opportunities for Georgia growers, since the existing domestic markets are either saturated or on the verge of saturation with very little opportunity for increase.

The Caribbean Basin markets - primarily St. Marten, Barbados and Trinidad - were targeted for the following reasons: 1) proximity to the United States; 2) Willingness to adopt American culture; 3) A large population base: 4) Receptiveness to U.S. products; 5) Easy access by air and sea freight; and 6) Influx of American tourists.

The study consisted of sending out two sets of marketing questionnaires. One questionnaire listed 45 products produced in Georgia. A second comprehensive and exhaustive marketing survey was based strictly on fresh and frozen fruits, nuts and vegetables produced in Georgia. These surveys and questionnaires were developed to gather information on marketing channels, structures, levels of satisfaction and to determine the sources and preference of supply to the Caribbean Basin markets. They were distributed to supermarket operators, import/export distributors, hotel and restaurant managers who attended the Caribbean Basin Trade Mission in St. Marten, Barbados and Trinidad in 2002.

“Georgia has a location advantage compared to Texas relative to the market opportunities,” says Ray Prewett, executive vice president, Texas Citrus Mutual. “There may well be some market opportunities for us in these or other Caribbean countries but we also have concerns about the negative impacts.” Prewett says some countries in the region have an advantage over U.S. producers in terms of cost of production.

“A few years back Guatemala flooded the U.S. market with cantaloupes during our season,” he says. “Since then they seem to have learned that was not good for them or us. There are other fruits and vegetables besides melons but this is the one I am trying to check out as far as the CATA is concerned.

A USDA/FAS report published in 2001 reveals that the hotels, restaurants and institutions sector of St. Marten generated $68 million of food service imports. The island enjoys duty-free status, and the United States has captured a substantial portion - approximately 80 to 85 percent - of the market. The island's soil characteristics and water limitations render even subsistent agriculture impractical.

Unlike St. Marten, the Barbados market requires strict compliance with food laws. Imported fruits and vegetables to Barbados must meet numerous requirements, include country of origin labeling and a listing of ingredients. UN trade data indicate that Barbados imported $131.4 million worth of food products in 2002 with an expected 3 percent trade increase in 2003. The U.S. market share in 2001 was only 36.3 percent. Thus, the study states, there is room for improvement, “if and only if our growers are willing to take the bull by the horn and comply with local regulations.” U.S. trade data reports that U.S. exports to Trinidad and Tobago was about $40 million in 2001, up significantly from previous years. “Agricultural products, such as snack foods, fresh fruits and vegetables, fruits and vegetable juices will perform well in this market, especially as the population of 1.3 million people is extremely receptive to U.S. products,” says Fonsah.

The study goes on to state that it is important for first-timers to familiarize themselves with the local business practices and import requirements. For example, even though labeling regulations and requirements are strict, sanitary registration of food products is not required.

Respondents to the surveys and questionnaires were asked to indicate which products interested them from a list of 45 different products, including fruits and vegetables produced in Georgia.

Out of the total respondents, 71 percent indicated vegetables, beef and beef products; 64 percent indicated dairy products, fruits, pork and pork products; 57 percent selected frozen foods, poultry and poultry products; and 50 percent were interested in canned goods, egg and egg products, grocery and value-added products and seafood. Fruits and vegetables stood out with a significantly high preference.

In Barbados, 12 out of 45 products from Georgia ranked above 50 percent in their scale of preference. Fruits and seafood were at the top of their preference, scoring 80 percent. They were followed by vegetables and other products.

In Trinidad, 10 categories of products hit their preference list. The study reveals that the most preferred products in this market were frozen foods, fruits, pork and pork products, spices, flavoring and extracts and vegetables, scoring 75 percent.

The survey indicated that about 14 fruits and vegetables produced in Georgia were in high demand in the Caribbean Basin markets and most - if not all - are imported from the United States. As for their fresh-product purchasing requirements, quality, price, reliability and convenience were top priorities. Business-partner relationships, follow-ups and dependability were important factors influencing purchasing decisions.